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Airbnb dispute may mean fewer beds available in Niagara Falls

Halina Smouse, owner of the Butler House Bed and Breakfast, makes up a bed in a guest room. The Butler House is a fully licensed bed-and-breakfast, and takes a small percentage of its bookings from Airbnb. (Derek Gee/Buffalo News)

Tourists visiting the historic neighborhood of Park Place can find a few remaining bed-and-breakfasts in Niagara Falls.

The B&Bs offer themed bedrooms, imported curtains and an assortment of teas. For decades, they were the only options for tourists looking for a home away from home just a short walk from the falls.

Now, B&Bs are getting competition.

Airbnb, a website widely used by millennials and others looking for a different vacation experience, allows locals to post anything from a couch to an entire house online. Those postings often offer cheaper rates than traditional alternatives like B&Bs, and are certainly less costly than hotels or motels.

Fifty dollars buys a tourist a room in someone’s house in lieu of a hostel bed alongside five or six strangers or a motel with sometimes unsavory online reviews.

And for the local resident offering a room, that $50 gives the host some extra money to reinvest in the home or pay toward property taxes.

Airbnb seems like a perfect deal. But some local B&B owners say it brings unfair and illegal competition.

Like other “shared economy” services such as ride-hailing apps Uber and Lyft, Airbnb is causing animosity in cities trying to deal with a largely unregulated, technology-driven industry. Niagara Falls, one of the biggest tourist destinations in the world, is not immune. There are between 300 and 400 Airbnb offerings on either side of the international border that runs through Niagara Falls.

After a complaint in May, the City of Niagara Falls sent 30 cease and desist letters to people hosting “illegal,” or unregistered, B&Bs – all of them Airbnb users. The city Planning Board and a newly formed task force are both examining the city’s current code, which doesn’t explicitly address Airbnb, to determine if it requires updates or simply stricter enforcement.

In other communities, closer scrutiny has resulted in Airbnbs being declared illegal and new laws going into effect against the website. Niagara Falls still isn’t sure what it will do, but some residents feel it’s time to level the playing field.

People with properties listed on the San Francisco-based website are adamant that they’re not operating bed and breakfasts. They argue that some properties are not owner-occupied, which is one of the defining traits of a B&B. Other people say they’re just making some money on the side, so they’re not running a full-time business like bed and breakfast owners.

Those operating established businesses, like Merle Smouse, owner of two B&Bs, believe people listing their rooms on Airbnb are offering the same or similar accommodations as traditional B&B owners are, but aren’t going through the same strenuous inspections process to become registered with the city or pay taxes on their guests’ fees. They need to play by the rules, which include certifications, inspections, insurance and taxes, Smouse said.

“That’s the cost of doing business,” he said.

‘Pie is getting bigger’

Kristen Grandinetti shares her square, red-brick home – a 30-minute walk from the American side of the falls – with her three black-and-white long-haired cats and a tenant who has leased the top floor of the house for 15 years.

None of the occupants has a problem sharing the home with travelers from around the world. Each week, it’s someone new: a couple from the Czech Republic, a young man from Thailand, a middle-aged woman from Texas. The guests arrive at Grandinetti’s plant-covered doorstop and enjoy their getaway with the room they rented on Airbnb.

Last week, the guest was a 20-something man from Scandinavia.

He already had checked out of the sunflower room – the $50 bedroom Grandinetti offers – but his bus wouldn’t leave for another five hours. Grandinetti shooed him over to the dining room and told him to stay.

“Just relax, just relax,” she said.

Grandinetti is no stranger to the hospitality business. She worked in it for 25 years, first at hotels downtown and then, after she became a teacher, at Park Place Bed & Breakfast during the summer. Now, offering a room through Airbnb satisfies her desire to be a hostess.

When complaints about Airbnb offerings surfaced in May, she said it was just another “personal attack” like others she has received in her time as a City Council member. She’s an opinionated person, and not everyone likes it. Still, the local complaints about unfair and illegal B&Bs are not directed just at her.

One argument Grandinetti makes in favor of Airbnb is that it brings greatly needed revenue to the city. According to an Airbnb press release, hosts in the Western New York area made $1.9 million last year. Grandinetti has benefited from this revenue. She says she reinvests her extra income in house projects such as redoing the backyard and taking care of plants on the front porch.

Another pro-Airbnb argument Grandinetti makes is that guests booking rooms through the service stay longer in Niagara Falls as compared to conventional hotel users. According to Airbnb, guests typically stay nearly three nights. Hotel guests, though, average one- to two-night stays in Niagara Falls, said Frank Stangio, the president of the city’s Hotel and Motel Association. Instead of spending more on accommodations, Airbnb visitors are probably spending more money at businesses and restaurants, Grandinetti said.

Grandinetti argues that she’s not taking money away from the hotels, motels, inns, B&Bs and hostels in the area. Putting her index fingers and thumbs in the shape of a circle, she said she thinks of the market as a pie. The market pie has been only so big in Niagara Falls for quite some time, she said. People have always fought for a sliver of it.

“What I’m seeing is that the pie is getting bigger,” Grandinetti said, bringing her hands out further. “The more we have to offer people, the better we all do.”

What’s making the pie bigger is the millennial generation. She said that what she and other “Airbnb-ers” are offering appeals to 18- to 34-year-olds, many of whom use shared economy services and might not stop in Niagara Falls without the opportunities these services open up.

When millennials use Airbnb, Grandinetti said, they expect something different from what a hotel offers. They want to experience the community they are visiting by living with the locals – a modern-day “when in Rome, do as the Romans do” attitude.

This is exactly what Airbnb banks on. Its home page tells consumers to “book homes … and experience a place like you live there.”

This kind of experience is not what “hotel people” are looking for, said John Percy, president and CEO of the Niagara Tourism & Convention Corporation. Those visitors want to be among many guests in a large, safe building, he said.

“(The millennial generation) has really made this industry grow,” Percy said of Airbnb. “They want a shared economy. They don’t want to own their own cars. They want to take Uber or Lyft. They don’t want to stay in a hotel. They want to stay in someone’s home.”

And Grandinetti doesn’t pretend to provide what a hotel or B&B does. She merely offers a friendly and respectable place to stay. Grandinetti offers two rooms: The sunflower room for a single guest, and Joie’s room, named after her sister who frequently stays there, for two people. And she provides a rack of tourist brochures, a table with snacks and a patio out back.

That’s what many want. Niagara Falls, N.Y., sometimes has a reputation for being behind the times, Grandinetti said. For the sake of her family, her students and her fellow residents, she wants to see Niagara Falls in a modern world – with Airbnb included.

A computer and a camera

Merle Smouse and his wife just finished transforming an old house into a new B&B two doors down and across the street from their first.

This new one, similar to their first – which is decorated with Belarusian silk curtains and Czechoslovakian holiday china dating back to 1937 – is legal. They have plenty of paperwork to prove it.

Merle Smouse flips through a stack of paper that includes the certificate of compliance, a state Health Department permit, a building permit, a Department of Environmental Conservation report, a sight plan for the city and many other papers on zoning and inspections.

He began the process for getting the new B&B approved back in November, with tedious steps like installing a fire sprinkler system and acquiring wireless fire detectors. With the required repairs, paperwork and inspections, Smouse said he spent about $12,000 getting his new B&B registered and up to code.

Compare his preparation with that of people listing on Airbnb, who only need a computer and a camera.

Smouse describes Airbnb as “the dumpiest of booking sites.” He said it requires users to meet few standards and allows them to pay scant attention to local laws. Smouse believes almost all those listings are illegal.

The city agrees. Patrick Ciccarelli, the chief of code enforcement, signs and zoning, sent about 30 cease and desist letters to residents of Niagara Falls in May and almost 10 the year prior – all of them Airbnb hosts – for operating an illegal “bed and breakfast/vacation rental.”

Businesses renting to tourists must file the proper paperwork and follow the rules, Ciccarelli said.

That means registering their homes with the city and getting inspected by the Fire and Health departments. They also must have a license and buy insurance, as well as collect sales and bed taxes for both the state and city, he said.

The Smouses did, as did Jeff Flach, a friend of theirs who runs the Gorge View hostel. Flach said he’s catering to the younger version of the B&B crowd – people who like to meet others while they travel, but don’t have the kind of money that B&B people have to afford those accommodations.

The Smouses and Flach don’t understand why some local homeowners think they become part of “some secret club” when they join the Airbnb website and shirk the laws.

“How about you stop and get a drink at my house?” Smouse asked. “I’m cheaper than a bar. Why can’t I do that? Or Air-stop-and-I’ll-cook-you-a-meal. I’m cheaper than a restaurant.”

The Smouses and Flach don’t believe that people listing their homes on Airbnb are just “the little guys” participating in the shared economy. To begin with, Flach said, they’re not sharing.

“If my daughter hands half her sandwich to her friend at lunch, that’s sharing her lunch,” he said. “If she traded her sandwich for an apple, that’s barter. If she said, ‘Oh, my sandwich is $2,’ that’s a transaction.”

“She’s in business,” he said. “That’s no longer sharing.”

They also think people are using the website to operate a full-time business.

There are no figures to support that claim in Niagara Falls. But when Attorney General Eric Schneiderman investigated use of the website in New York City in 2014, he found that 6 percent of hosts received 36 percent of the reservations and 37 percent of the revenue.

So, the Smouses and Flach don’t buy the argument that most people are just making extra income from a room or two in their house. The Smouses and Flach believe they make hosting into a full-time job, listing multiple properties on booking sites like HomeAway, VRBO and FlipKey.

The Smouses and Flach also don’t believe that people who list on Airbnb are as ignorant of the laws as the business owners believe they act. Merle Smouse pulls out a page printed from the website.

On it, Airbnb shows hosts what New York’s laws are, with links to more local information. Hosts agree they have read these rules before they post on Airbnb.

The Smouses and Flach have many other points against listings on Airbnb. They say it spreads out tourism and makes it harder for the city to centralize police to keep tourists safe. They say the city is missing out on hundreds of thousands of possible dollars it could get in tax revenue.

But, their point essentially boils down to this: laws are in place. They don’t want the city to change or update the code. They want the city to enforce them. They want people to comply.

Getting out of the gray

No one knows exactly what the City of Niagara Falls will do as Airbnb becomes more popular. Complaints like those of Niagara Falls residents about Airbnb have already spanned the globe.

Berlin banned residents from renting whole apartments and houses on the site in May.

San Francisco, Airbnb’s birthplace, continued its longtime battle with the company in June by requiring the site only publish listings with official registration numbers.

And New York City is waiting for the governor to sign off on new legislation against listing unregistered rentals on the site.

All of these cities said Airbnb was exacerbating issues with increasing rents and decreasing housing availability. But Niagara Falls doesn’t have those problems.

Carroll Reetz and her husband have invested in turning four neglected houses into new tourist rentals. One is a B&B, and three are full vacation rentals listed on Airbnb.

If more people reclaimed the many vacant houses in Niagara Falls, that would help transform blighted neighborhoods into a better environment for tourists, Reetz said. As an example, she pointed to a house two doors down from one of their rentals. Chunks of bricks are missing from the exterior walls. What used to be “beautiful marbled windows” are shattered.

Their neighbor, another resident who transformed a house into a vacation rental across the street, jokes that they should play Jenga with the rest of the bricks until the house falls down.

Reetz formed a task force to examine how the city should address vacation rentals, so she and others can continue what they’re doing. The city has bigger problems to deal with than shutting down Airbnb listings, she said.

When it comes to enforcing the current city codes, Ciccarelli, the city official, said there’s not much more he can do.

“I can’t go to every one of these houses and see if someone’s sleeping there,” he said.

Few – apart from some in the B&B business – want these Airbnb listings to be shut down, anyway.

Percy, president of the Niagara Tourism & Convention Corp., said his tourism center receives $4 of every $5 the city gets in bed taxes. His center promotes hotels in the area. A rack of hotel and inn brochures in his center’s lobby proves it.

But he and Frank Strangio, the president of the city’s Hotel and Motel Association, echo each other in saying they’re not against Airbnb.

“Airbnb is a great concept,” Strangio said. “The problem is it’s not on a level playing field.”

Strangio said he fears that if people continue listing their business without following the code, there will be no incentive for people to invest in hotels and other registered businesses.

But so far, the hotel business has been a consistently productive industry. It made more than $53 million last year in the City of Niagara Falls, and more businesses are popping up. A new motel is opening next door to Strangio’s Quality Inn, and Strangio just opened the Wingate by Wyndham downtown.

For those supporting the burgeoning industry of Airbnb, the problem isn’t whether people are complying with existing rules, but what the rules should be in the first place.

“The question is, where do you draw the line?” said John Carlino, a Buffalo resident who rents a couple of rooms on Airbnb. “Do you draw in a little income on the side? Or a serious business?”

These are questions that the city, beginning with the Planning Board and Reetz’s task force, is starting to examine.

“It’s a process, but it’s a process that unfortunately hasn’t been done,” Reetz said. “It should’ve been done five, six years ago so people weren’t operating in the gray.”

In the meantime, Airbnb host Grandinetti is busy preparing her rooms for the next guest. She has to dust, vacuum, wash the sheets and restock the snack cart.